Owning your first home is within reach with a Welcome Home Loan

Transcription

1 Owning your first home is within reach with a Welcome Home Loan

2 A Welcome Home Loan makes it easier to buy your own home. A Welcome Home Loan makes it easier for you to buy your first home. It s designed for first home buyers who can afford to make regular repayments on a home loan, but have trouble saving for a large deposit. Okay, where s the catch? As well as having a 10 percent deposit, you need to meet certain criteria including an income cap and relevant house price cap. You will also need to meet the specific lending criteria of the participating lender you choose. With a Welcome Home Loan you only need a 10 percent deposit, not a 20 percent deposit as required now by most lenders. Welcome Home Loans are issued by selected banks and credit unions, and underwritten by Housing New Zealand. Maximum income To be eligible for a Welcome Home Loan your combined household income for the last 12 months must have been $80,000 or less (before tax) if you are the sole borrower. If you are teaming up with one or more borrowers to buy a house, then you can have a combined household income up to $120,000 (before tax) in the last 12 months. Do you need help with your deposit? To find out more about the HomeStart grant and the first-home withdrawal go to kiwisaver-homestart.co.nz Not yet a member of KiwiSaver? Go to kiwisaver.govt.nz to find out about joining. There is help available if you are having trouble saving your deposit. Your deposit can be gifted by a relative. You can team up with other borrowers to put together your deposit and purchase a home. You can also use two features offered by KiwiSaver. If you are a member of KiwiSaver and have been contributing regularly for at least three years, you may be eligible for a KiwiSaver HomeStart grant and a KiwiSaver first-home withdrawal. The KiwiSaver HomeStart grant was introduced on 1 April 2015, replacing the KiwiSaver first-home deposit subsidy. Like the KiwiSaver first-home deposit subsidy, the KiwiSaver HomeStart grant provides eligible first-home buyers with a grant of up to $5,000 for individuals and up to $10,000 for couples to put towards towards the purchase of an existing home. In addition, the new KiwiSaver HomeStart grant also provides eligible first-home buyers with up to $10,000 for individuals and up to $20,000 for couples to help with the costs of purchasing a brand new home. Changes to the KiwiSaver first-home withdrawal were also introduced on 1 April 2015 that means eligible members can withdraw their KiwiSaver contributions (including tax credits). However at least $1,000 must remain in their KiwiSaver account. Maximum amount you can borrow Other criteria The maximum amount you can borrow with a Welcome Home Loan depends on the region you are buying in. Each region has a house price cap. The maximum loan for that region is the house price cap less your 10 percent deposit. The house price caps are: Auckland $550,000 Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Nelson City, Tasman District, Waimakariri District, Christchurch City, Selwyn District, Queenstown Lakes District $450,000 Rest of New Zealand $350,000. You must plan to live in the home you are buying. A Welcome Home Loan cannot be used to buy an investment or rental property. You cannot own any other property. You will need to pay a 1 percent Lender s Mortgage Insurance premium and the lender may apply a loan application fee. In most cases these fees can be built into the home loan. Talk to your participating lender to see what applies. You are a New Zealand citizen or permanent New Zealand resident (holding a Permanent Resident Visa ). What about if I want to build a house? Some participating lenders allow you to build a new house with a Welcome Home Loan. Please ask your preferred lender if they do and what their criteria are. 2 3

3 Case Study A Welcome Home Loan makes it easier to buy your own home. How Ben and Toni bought their first home in Christchurch using a Welcome Loan and KiwiSaver Ben and Toni have an offer to buy their first home accepted as long as they meet the conditions set out in the sale and purchase agreement. The property they re interested in is a $400,000 existing home in Hoon Hay, Christchurch. They have not been able to save a deposit, but have been KiwiSaver members since it started in July In the last 12 months, they have earned a combined income of $100,000. Both Ben and Toni have applications for the KiwiSaver HomeStart grant pre-approved and are eligible for $5,000 each to help with the purchase of their first home. They are also both eligible to withdraw their KiwiSaver contributions (including tax credits). However at least $1,000 must remain in their KiwiSaver account. Together they can withdraw $35,000. Banks have advised they will need a deposit of between 15 and 20 percent of the purchase price ($61,500 $82,000), which they don t currently have. After looking through the Welcome Home Loan website, they saw it may be possible to get a loan with only a 10 percent deposit so applied to a Welcome Home Loan lender and showed that with all of the KiwiSaver HomeStart grant and first-home withdrawal, they had $45,000 to put towards the purchase. As this totalled nearly percent and because they met the other lending criteria, they were awarded a Welcome Home Loan of $355,000. What are the next steps? If you think you may be eligible for a Welcome Home Loan, and you would like to take the next step, visit the Welcome Home Loan website to read more about the loan. Then contact a participating lender refer to the website or the table below. Each lender has their own credit criteria you will need to meet along with the standard Welcome Home Loan eligibility criteria. WELCOME HOME LOAN LENDERS PHONE WEBSITE NZCU Baywide Heartland Fletcher Challenge Employees Credit Union Kiwibank Nelson Building Society Southland Building Society TSB Bank Westpac The Co-operative Bank HOUSE PURCHASE PRICE DEPOSIT AMOUNT DEPOSIT AVAILABLE WELCOME HOME LOAN $400,000 $45,000 ($35,000 + $5,000 + $5,000) 11.25% $355,000 (88.75% LVR) 5

4 Easy Welcome Home Loan Guide Are you interested in owning your first home? How do I find out more? If you would like to find out more about a Welcome Home Loan: Visit Contact a participating lender see page 4 Do you want to live in the house you buy, rather than renting it out? Call 0508 WELCOME ( ) How many people want to borrow? Budgeting and other products. If you would like to find out more about home ownership and get help with budgeting and other lending products: 1 2+ Download Home Ownership: A guide to buying your own home from Is your household income $80,000 per year or less (before tax)? Is your household income $120,000 per year or less (before tax)? Sorry, you don t qualify. Visit and for savings and budgeting advice Sorry, you don t qualify. Do you have a deposit that is 10 percent or more of the purchase price? Consider joining KiwiSaver so you will be eligible for the HomeStart grant and first-home withdrawal after three years of contributions. Three or more borrowers can team up to purchase a home. The deposit can be gifted by a relative. Disclaimer The information contained in this booklet is intended to help you understand Welcome Home Loans and is indicative only. It is not intended to address the specific circumstances of any particular individual or entity. All reasonable steps have been taken to ensure the quality and accuracy of the information. The eligibility criteria or other policies applicable to Welcome Home Loan may be changed, deleted, added to or otherwise amended without notice. The information contained in this booklet should not be construed as legal or professional advice and you should take advice from qualified professional people. You may qualify for a Welcome Home Loan. Contact one of the participating lenders. Republished in September 2015 by Housing New Zealand. This booklet is also available at 6 7

5 HWHLB 12/15 Supported by